Purchasing A Vacation Home: What You Need To Know

Tena Moore

If you are thinking about purchasing a vacation home or investment property there are two things to think about upfront: money and time.

Before jumping into a second home, ask yourself if you have the money to do so. Do you have the money to buy the home you want? Do you have the money to decorate, renovate and furnish it? Can you pay for the running costs and taxes on two homes? Do you have the money to travel back and forth? There are many things to think about in terms of money for a second home, beyond the actual mortgage or financing that you may need.

Request a free Mortgage quote>>

The second factor is time. Do you have the time to invest in searching for a second property? Do you have the time to negotiate and purchase? Do you have the time to decorate, renovate and fix it up? Do you have time to invest in such a project?

If you can answer ‘yes’ to money and time, then you may want to begin your search for the correct mortgage.

Request a free Mortgage Quote>>

When thinking about the mortgage choices for a second home, there are several options: getting a single mortgage for your second home; refinancing your mortgage on your first home to cover the costs for both homes; using a home-equity loan to make a down payment on the second property. Or, you could pay cash upfront.

If you decide to get a mortgage for your second home, know that lenders will not give you a rate as attractive as your first home loan, because they are aware of how much more your income will be stretched. In general, second home rates run ¼ – ½ of a point higher than primary residence rates. If you are still paying off your first mortgage, you may want to consider refinancing or combining your mortgage for lower rates.

Request a free Mortgage Quote>>

The last method, other than paying cash up front, is to take out a home-equity loan or line of credit on your primary residence to fund all or part of your second home purchase. This choice will often result in lenders raising their rates a point or two above the prime rate, and although it makes acquiring a second home more affordable, it could cost you much more than you expected in the long run.

All in all, a second home is becoming much easier to afford for many Americans. If you have the time and the money, it may be a wise choice for expanding your lifestyle with a beach or ski home, or expanding your bank account, through property investments.

Request a free Mortgage Quote>>

This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.

  • Powered by SecureRights

    Answer these questions to request a FREE quote